Broadcom’s Henry Samueli: Don’t Get Into Tech For The Money—It’s Way Too Hard

ReadWriteBuilders is a series of interviews with developers, designers and other architects of the programmable future.

Talk to Broadcom’s Henry Samueli, and you get the sense of a man who knows exactly how lucky he is. The son of immigrant parents, Holocaust survivors, the current chairman and chief technology officer grew up stocking store shelves, but made good as an electrical engineer and university professor. And that was before he went on to co-found a multi-billion-dollar maker of broadband-communication chips.

Today, you can find Broadcom chips in products as varied as the iPhone, the Samsung Galaxy Gear smartwatch, Roku streaming boxes, the DISH Hopper DVR, the BMW X5, and LG’s Smart ThinQ refrigerators. Last week, the chip maker held a press event, “Geek Peek,” to promote these types of technologies. I caught up with Samueli there.

The Early Years

ReadWrite: You grew up in California.

Henry Samueli: Yes, I grew up in Los Angeles.

RW: And you used to stock shelves at your family’s store? That’s a big leap, from stock boy to a processor chip maker/technology executive.

HS: I worked in my parents’ liquor store as a teenager, stocking shelves and running the cash register. But that was my first exposure to business.

I went on to University of California Los Angeles, and studied electrical engineering. I earned all of my degrees there—bachelors, masters and PhD degrees. I finished my PhD in 1980, and went to work in the defense industry, at a company called TRW in Redondo Beach. There, I was exposed to the field of broadband communications—but for the military.

The military would have very high speeds, satellite communication and communications between soldiers the battlefield, and so forth. I was close to this fascinating field of communications.

About 5 years later, I was offered a professorship at UCLA, so I became a full time professor of electrical engineering. But I started doing research on the field of broadband communications at TRW, but applied to consumer applications.

Working On Broadband … “Before Broadband Even Existed In the World”

RW: What was the state of broadband communications at this point?

HS: That was before broadband existed in the world. It was really a niche military application.

I spent 10 years full-time at UCLA, working on this research for chips for broadband communication. The need for it in the commercial world became readily apparent, because everyone who was trying to access the Internet in those days was doing it over voiceband modems, running at 10s of kilobits per second—snail’s pace. There was a huge thirst for faster Internet access.

So myself and one my PhD students, Henry Nicholas, who was also a colleague at TRW, we ended up spinning out and starting Broadcom, as a spin-off of university research.

RW: You started it in 1991. What was it like starting a chip company in the 1990s?

HS: A lot different. The world of semiconductors was a lot different 20 years ago. The chips were much less complex than they are today.

RW: Would it even be possible to start a company like Broadcom today?

HS: I don’t think you could. I think the industry has matured to a point that is very difficult for startups to make it in semiconductors, because the chips are so complex. They are a thousand times more complex than when we started the company. So you can’t design these chips with a handful of people anymore, like you used to be able to do. So, to start a company today, you’d probably pick a different field than semiconductors.

But the advantage we had was the experience from the military side of the house. We had real experience in that field already, so we didn’t start with a blank piece of paper. At TRW, Henry Nicholas worked in their microelectronics center building chips for military applications. So he had very detailed knowledge of the chip-making business and chip-design business for the military. We combined that into the knowledge that we had in the research in the university.

RW: So you were an academic professor, and you started developing broadband chips on the side? But this wasn’t just a side project….

HS: We were very serious about it from the very beginning. We knew it was pretty special technology that we had developed, and we knew we were way ahead of anybody else—we had that head start working on military broadband communications. And we saw the thirst for broadband in the commercial world, so we took it very seriously from day one. We never knew it would grow to the extent it has today, but we wanted to make it a real company.

RW: I read somewhere that you and Nicholas used to work in the spare room at his home.

HS: Our first office was in his garage, literally. In his condo. We worked out of his garage for about a year, and then we moved into an office building right near the UCLA campus. A high rise building. We subleased the space from lawyers.

Throwing The Chips On The Table

RW: What were your first priorities and goals, as engineers and company founders?

HS: Well, the key was to find the first real significant market to address, because broadband can be applied in many different areas. And we were very fortunate that there was a very specific need that appeared. In fact it was an outside company that contacted us about it, called Scientific Atlanta. They were developing the first digital cable TV set top box.

There was no such thing in the world prior. It had all been analog television. They had a contract from Time Warner cable to build this digital cable box, but there had been no technology, no chips available to build the box. They didn’t know how to do it.

They had seen our research in this area, and they asked, “Can you convert that into a chip for our cable box?” We said, “Yeah! That would be a great project.” So they funded us, gave us a million-dollar development contract, and we designed a cable modem chip for their set top box.

That was the first entree into the whole digital home world that we live in today. And we’ve grown that business over the last 20 years into this great fantastic business.

RW: Building a technology, a company, takes a lot of long nights and hard work. What kept you going?

HS: Most startups work 12, 16 hours a day. It’s insane. You can only do it if you’re in love with what you’re doing. Our goal was to change the world, to connect everything. That was our mission in life. So you just drive forward everyday. How do I take that next step towards reaching that goal of connecting everything?

RW: And you built a very successful company. But then, a few years ago, you went through turbulent times: The SEC accused you of stock options backdating, and you even plead guilty to one count and left Broadcom. A federal judge exonerated you in 2009, you returned as CTO and chairman a couple years later….

HS: You go through these bizarre experiences in life and this was certainly a bizarre one.

RW: If you could go back, what would you have done differently? And did you glean anything from that that informs what you do today?

HS: It’s hard to say what I would have done differently, because we thought we were doing the right thing. That’s why the judge threw everything out, because he recognized that’s exactly what we were doing. You try to be more careful, but in the end, you just do what you think is the right thing. That’s my philosophy in life—if you think you’re doing the right thing, you’ll be fine. And in the end, that’s what happened.

Moving Forward

RW: Shortly after you returned, Broadcom shut down its digital TV and Blu-ray chip operations.

HS: That’s right.

RW: Now you’ve entered mobile, which has been hot for a while, and you’re stepping into the wearable tech arena. So how do these decisions come about? How do you decide which technologies to back, and which ones to back off from?

HS: It’s a very interesting process you have to go through, and we do it on a regular basis.

The executive team, there’s about 10 members of the executive team at Broadcom under Scott McGregor, the CEO. On a regular basis, we discuss portfolio management, as it’s called, where you look at the different businesses you’re in, analyze them in terms of their profitability and future growth, and prioritize, because you have a fixed budget of R&D investment every year. In our case, we spend roughly 25% of our revenue on R&D. And if you’re doing 8 billion in revenue, that’s about 2 billion dollars we spend on R&D. Which is a lot of money but still you can’t do everything.

RW: What would you say are your biggest obstacles now?

HS: Well, our biggest challenge these days is in the cellular space. We’ve been launching our LTE platform. So, if if I had to do anything over, what would have I done better? I would have started LTE sooner. The market took off quickly, and we didn’t invest soon enough. Now we’re in catch up mode.

RW: I believe that puts you in direct competition with Qualcomm.

HS: That’s correct. They are the leader in the LTE market today.

RW: You have them in your crosshairs.

HS: [Laughing] Mutual crosshairs. You have lots of competitors in the market. Nobody is without competitors, so there’s a whole list of companies that we compete with worldwide.

RW: So Broadcom has announced Bluetooth Smart integration in its system-on-a-chip (SoC) with wireless charging support for the wearables market. Right now, that’s one of the main obstacles to wearable technology really taking off, this vexing charging scenario. So how will your solution make that work?

HS: You’re absolutely right. I think that charging is one of the biggest impediments to the Internet of Things taking off because you’re not going to have 10 different devices that you have to plug in every night. It’s not practical.

Ultimately, wireless charging is going to be the answer. You’re going to have a pad near your bed at night, plugged in, and you go home, put down your watch, put your phone or whatever it is on that. And it charges overnight. Because it’s no work to do that. The biggest impediment to it is that there are different standards in the market. This year, hopefully, they will come together and find a unified approach.

Betting On The Internet Of Things

RW: Which technologies do you see emerging in 2014?

HS: I think we’re starting to see an inflection point with the Internet of Things. In a way we’re trying to address this market because there are thousands of devices that are going to be built. You can’t build thousands of chips, one for each device. You have to have some commonality. So we’re trying to implement a platform that is common for all of these types of devices. We call it WICED—Wireless Internet Connectivity for Embedded Devices.

We have two flavors of WICED, a wireless version and a Bluetooth Smart version. You put everything together in a very simple, easy to use package—the chip, the antennas, the software, everything is shrink-wrapped for any user who can literally buy it from the Internet from any distributor. You don’t even have to deal with Broadcom directly. And then you can interface your favorite sensor to it, whatever it happens to be, and build an Internet of Things device.

So if you have a thousand different devices, and you only have one platform, you can still proliferate it in high volume. This is what we need as a chip manufacturer. You need the volume to justify the investment.

With WICED, I also think it’s going to open up opportunity for the small entrepreneur, like Pebble. Or two or three people can buy the WICED modules, connect it up, and build a wireless scale or a wireless thermostat, or wireless smoke detector from Nest, with very little research and development.

It’s essentially creating the hardware development equivalent of app developers.

On the hardware side it’s historically been very expensive to build a hardware company. I think in the IoT world, enabled by WICED type platforms, you can have small garage shop innovators creating all these unique devices. So I’m very excited about it. And I think, for the next 20 years, it’s going to be a huge opportunity for this industry.

RW: People have been talking about the Internet of Things for quite a while. Do you think next year might be the turning point?

HS: I think it’s still got a long way to go. But it’s just starting to go up the S curve. It’s right on that cusp of growth.

It’s not mature by any stretch. It won’t be mature for ten more years. But I think you’re going to start seeing a lot more companies proliferate. Big companies are all over it. On one side you have Samsung. There are rumors of Apple. Sony has it. Big companies, little companies, everybody’s innovating. It’s great to see.

The Balancing Act

RW: You’ve always been very interested in how others grow and develop, and not just in business. For example, you’re very involved in charitable causes.

HS: My wife and I knew we wanted to actively get into philanthropy. We were so blessed with what happened to us. So we started the Broadcom Foundation the year before the company went public, and we’ve been actively involved ever since. In fact, my wife basically runs the foundation now.

To me, that’s an important part of wealth creation—giving back. It’s a challenge to make the money, but it’s also a challenge to give it away too. You want to be intelligent about it because there are a lot of wasteful causes. In some sense they call it venture philanthropy, where you expect something to come out of it when you invest.

RW: In addition to your philanthropical work, you’re also the owner of the Anaheim Ducks hockey team. And all that’s aside from your “day job” at Broadcom. How do you balance all of that? You’re a busy man.

HS: Very. I love it. People say, “Why don’t you just retire? You’re so rich you can retire.” But I love what I do. I don’t do this for the money, I do this for the passion. And that’s the message to [up-and-comers]. You have to be passionate about what you do. If you’re doing it purely for money, you will not be successful. Because you have to work way too hard.